Joshua P. Meltzer, Geoffrey Gertz, Samantha Gross, Thomas Wright, and Tarun ChhabraWednesday, June 6, 2018
Editor's Note: On June 4, the Brookings Foreign Policy program held an on-the-record media briefing ahead of the G-7 summit in Quebec on June 8-9. Below are the five scholars’ remarks on that issue, edited for clarity.
Joshua Meltzer, Senior Fellow in the Global Economy and Development program: Just when you thought that it couldn’t get a whole lot worse, it keeps getting worse. In some way, that’s not particularly surprising. Unfortunately, with the failure to extend waivers to the EU, Canada, and Mexico, regarding new U.S. tariffs, Section 232 tariffs on steel and aluminum are going to come into effect. I think Trump has been using tariffs as sticks, essentially, to get others to do what he thinks is necessary. It was clearly never going to work, certainly not with the EU—but that that waiver is now expiring is to be expected.
With Canada and Mexico, however, I actually was a little bit surprised. I thought that in the context of the NAFTA negotiations—which according to all reports seemed to be going quite well—and the push last month to try to meet the summer trade deadline that House Speaker Paul Ryan had set for actually getting a trade agreement through Congress, that there was some progress there. The fact that Trump would be prepared to put tariffs on Canada and Mexico signifies that they’ve come to the conclusion that they’re actually a fair way off from concluding NAFTA, or somehow that this would actually get it over the line. If it’s the latter, that’s clearly not going to be the case. In fact, we’re probably in a period of more difficult politics and a harder slog on NAFTA than we recently thought.
All of this is part of the context of the G-7 discussion. Secretary Treasury Steven Mnuchin is doing his best to play the free trade hand in the administration, fielding claims about U.S. leadership, for instance. I wouldn’t want to overstate what these tariffs mean more broadly for trade, since we’re clearly going through a particular moment. I also think that the G-7 leaders are clear-eyed about China, including on whether it has the genuine willingness or capacity to take on the type of role that the United States has played. Overall, I think the United States will still be central to a lot of major trade issues, but it’s just going to be very difficult given the politics of the moment.
Geoffrey Gertz, Post-Doctoral Fellow in the Global Economy and Development program: I agree that tariffs are going to be the big issue at the upcoming G-7 meeting. It certainly was the biggest issue at the most recent meeting of the finance ministers. The other G-7 members are very upset at the United States right now, and I think Canada in particular is very upset. It was clear from Canada’s rhetoric when the most recent steel and aluminum tariffs came into effect that there was a lot of anger at the tariffs themselves.
There’s particular anger at the national security justification. The Canadians are very upset at the idea that they are in any way perceived as being a national security threat to the United States. They view that as a ridiculous position and beyond the pale, far beyond the actual economic impacts of any of these tariffs. The Canadians have been putting a lot of effort into managing U.S. trade relationships since Trump came into power, and they’re getting a bit tired of it. They’re not quite sure where to go next. As Josh was saying, NAFTA talks seem to have hit an impasse. While we might have been close to a deal maybe a month ago, now it’s looking like that could be much further off. Again, I think the Canadians had a very emotional response to these tariffs, and are going to make those feelings known.
Having said that, I’d be surprised if any big announcements come out of this meeting. I don’t think we’re going to solve this trade problem at the meeting this week. I still think that ultimately, a negotiated settlement will happen, but it’s going to take a longer time than we have at the moment. I wouldn’t expect this problem to be resolved.
The other big question on the agenda is going to be the China trade relationship. Also last weekend, Wilbur Ross was in China, looking for a U.S.-China trade deal. That didn’t happen, and those talks are ongoing. Really, from the rest of the G-7’s point of view, the obvious strategy is that the G-7 should be working together to come up with a joint strategy towards China. I think the EU and Canada are very tired of having to deal with the American trade tensions rather than having a longer-term, more focused view of what are we going to do about the China trade question, which I think is the bigger, long-term question that the G-7 needs to reckon with.